STATEMENT OF MAYOR MICHAEL R. BLOOMBERG ON SUCCESSFUL PASSAGE OF NEW PENSION TIER FOR CITY TEACHERS

“We have been seeking reform of the
City’s unaffordable and outdated pension structure for some time, often with
little support. We had a breakthrough in June, when the United Federation
of Teachers recognized the need to begin creating a modern system the City can
afford, while continuing to provide City teachers with a retirement package that
they deserve. I want to thank Governor Paterson and the Assembly and
Senate for making our agreement with the United Federation of Teachers, which
will deliver $100 million in annual savings over the next 20 years, into a
reality. I look forward to working with our other partners in organized
labor to begin creating the pension savings the City needs, while still
providing deserved benefits to City workers.”

Under the legislation enacting the City’s agreement, all
current benefits and health provisions continue. New hires will continue to be
able to retire with an unreduced pension at age 55 with 27 years of service. New
employees will make a 4.85 percent pension contribution for 27 years and 1.85
percent thereafter, up from the current 4.85 percent contribution for 10 years
and then 1.85 percent through 27 years. A 7 percent annual return on fixed
Tax-Deferred Annuity accounts for Teachers Retirement System and Board of
Education Retirement System members has been established. The additional 1.25
percent rate above the guaranteed 7 percent rate will no longer be available, a
modification that will help the City weather a downturn in the financial
markets.

The agreement
establishes an increased vesting requirement to receive pension benefits: 10
years of service, up from the current 5 year requirement. Additionally, the
agreement calls for a required 15 years of service to obtain retiree health
insurance benefits, up from the current 10 year requirement, a provision that
will require a local law to be enacted. Both vesting measures will reward
educators who choose to make teaching a
career.